Komsomol Capitalism

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“Bastards! (сволочи!)” For the last week a women who sits in front of me in the reading room has been cursing documents as she thumbed through files of Komsomol protocols and resolutions from the late 1980s. I finally found out what she is working on the other day.

“They are all thieves,” she told me yesterday during tea. “They stole from me and Russia. During Komsomol meetings they were diving up the property of cooperatives, allocating money for projects and themselves.” The “they” are Russia’s oligarchs, many of which have fled the country as exiles. “Khodorkovsky’s name is everywhere,” she told me pointing to a document from 1991 that details funds going to one of the oil cooperatives and banks he “owned.” The protocol in the document allocated to him over a million dollars.

“You know,” I told her “many in the United States consider people like Khodorkovsky are considered heroes of democracy.” “Well, here they are all thieves.” And it was no wonder, she added, because Khodorkovsky was tied to American banks in the early 1990s.

This woman is working on an article she hopes to publish in Der Spiegel. The story of how leading cadres in the Komsomol allocated property to themselves is a fascinating story. It is a perfect picture of what might call primitive capitalist accumulation with all the theft, swindle and blood that goes with it. Everybody knows how elites the Communist Party, like Gazprom’s Viktor Chernomyrdin became instant billionaires. What is less known is how Communist Youth League cooperatives were used in the 1980s as a means to marketize the Soviet economy.

Gorbachev’s idea was good natured but na?ve. By rehabilitating the ideas of Nikolai Bukharin, Gorbachev hoped to revitalize the executed Bolshevik’s slogan “Enrich Yourselves!” and his ideas about socialist competition. Like in the 1920s, Komsomol cooperatives of the 1980s were subjected to market principles to foster competition with state enterprises. The competition, it was believed, would increase productivity and production quality. It is now called Komsomol capitalism.

Komsomol cooperatives were based in two industries: construction and technology. But archival documents might reveal a much wider breath of entrepreneurship. From the few documents, I was shown, the Komsomol was allocating funds to oil, banking, and publishing, all of which were run and later owned by key Komsomol cadres. This of course wasn’t Gorbachev’s idea. His idea was that using the Komsomol to experiment with market reforms was politically safe. The Party pumped funds into the organization for it to set up cooperatives. In the case of technology, it was hard currency since Komsomol members would buy old computer equipment from the West and refurbish it for big profits.

By the time the Soviet system collapsed, the now redundant Komsomol was awash with cash. The players in the organization quickly appropriated it and set up the first banks, and therefore were the first ones that had the ability to give credit. The Komsomol oligarchs also made out big in the privatization scandals of the 1990s where they took privatization shares for loans. The result was that many, like Khodorkovsky, became the owners of recently privatized state enterprises.

“I’ll take these documents to court if I have to,” the woman told me with hopes that an article based on archival documents will bring some justice. In fact, some of the documents she’s looking at were used in Khodorkovsky’s conviction. “The strange thing is that he didn’t believe he was guilty. This is why he didn’t flee to Israel or America like the others. But how could he think he was innocent!? His name is all over these documents. And there were laws on cooperatives that prevented their privatization. And the Komsomol was after all a social organization and therefore not theirs to take.”